Futures show strong open on jobless data, oil drop

Stock index futures pointed to a sharply higher open on Thursday as crude oil prices fell and jobless claims dropped to their lowest level in more than 2-1/2 years.

The government said weekly initial jobless claims declined to 368,000 versus a forecast of 398,000, one day after a similarly strong ADP report on private sector hiring. Taken together, the two could raise optimism for Friday's payrolls report.

As each week goes by that we're seeing claims under 400,000, we get closer to the level where we can start expecting faster job creation, said Mike Gibbs, managing director and chief market strategist at Morgan Keegan in Memphis, Tennessee.

The Arab League said a peace plan for Libya was under consideration, and while have some have questioned the substance of the proposal, put forth by Venezuela's Hugo Chavez, a resolution could remove a major headwind to equities.

Crude prices have spiked in recent weeks on concerns the unrest in Libya could lead to supply disruptions, resulting in a corresponding drop in stocks as market participants fretted that high energy costs will weigh on economic activity.

April crude futures fell 1 percent but was still above the key $100 per barrel level. Brent crude oil was down 1.3 percent.

If there was a peace agreement, crude oil could trade down to around $94 to $95 per barrel, Gibbs said. But the jury is still out on whether we've seen the full extent of the issue since we've seen so much more trading volume on down days than up days.